The Politics of Renewable Energy

I found the recent NY Times article on the shifting politics of renewable energy morbidly fascinating on both a political and economic level. Basically the article pieces together anecdotes of odd-couple political alliances between renewable energy boosters and Republicans, Libertarians (e.g. Barry Goldwater Jr.), or Tea Party stripes. My reaction was that the Times seems to have found a collection of Republicans who want to support renewable energy for all the wrong reasons. Barry Goldwater seems to see renewable energy as a freedom issue and solar panels as sticking it to the man – where the man in this case is the electric utility.

A new political twist on this is the perception of utilities as extensions of the government, with “prices set by bureaucrats.” In fairness, some of these folks probably supported electricity competition (which still has its share of bureaucrats). Ironically, with competition, when there is a different company billing you for the energy, it’s pretty clear that your utility bill is just for the grid infrastructure part – and we still need to pay for it. Sorry, there is no escaping these bureaucrats unless you are willing to go off the grid completely.

Others attempt to bring national security into the picture, which requires some impressive rhetorical gymnastics. Tom Morrisey of the Arizona Republican Party links solar energy to the war in Afghanistan. In the past, Energy Institute bloggers have had to complain when electricity subsidies were justified as somehow reducing our dependence on foreign oil, which fuels only a trivial fraction of US electricity production. At least Morrisey avoids that mistep, as there is no oil in Afghanistan. Perhaps he is focused on our dependence on foreign lithium.

The economics in the article is really nothing new. The fights being played out across the country are about the fairness, and sustainability, of solar policies that shift the fixed costs of network infrastructure to customers without solar. I am frustrated how verifiable facts are reported as “arguments” instead of checked and reported as true or false. The Edison Foundation “argues” that non-energy charges account for 55% of an electric bill on average. The fact that a big part – usually a majority – of a residential electric bill covers costs other than generation is not an “argument,” it’s a truth. Only 31% of the electric charges on my last bill are for generation. The EIA website says that over all customers (including commercial and industrial) generation accounts for 58%. That’s a lot higher because for commercial and industrial customers T&D costs are much lower. Your percentage may vary but the underlying point – that your bill covers a lot more than energy – does not.

The counter-argument, articulated by an Arizona Republican, is that this implies that if he conserved energy by using less air-conditioning, he would also be free-riding on these grid charges. Yes! That is exactly right!

We have been recovering fixed costs with variable rates for so long that people do not realize what the costs really are. At one time it was perhaps reasonably fair and financially viable to pro-rate fixed charges according to a home’s energy use. As some homes approach very low levels of net energy use, that is no longer fair or financially viable.

The “freedom from the utility argument” would carry a lot more weight if folks were in fact not using the expensive grid infrastructure they complain about paying for. However the vast majority of solar installations do not allow one to even power a house during a black-out, let alone disconnect from the grid completely.

Liberals have come to embrace the notion that the costs of health-care risks should be pooled and shared by the general population. They do not seem to feel that way about energy infrastructure. The Republicans in this piece don’t want to pay (or don’t recognize) the costs of the grid either. Neither side of this “green-tea” coalition has the economics right.